Microsoft, based in the northwestern state of Washington, announced its offer Friday, in a deal that includes both cash and stocks. Microsoft says it will offer $31 a share for Yahoo, which represents a 62 percent premium above its closing stock price on Thursday.

The offer comes a day after former Yahoo chief executive officer Terry Semel stepped down as chairman of the company's board of executives. Semel resigned his post as CEO last June as the California-based company began losing market share to rival search engine Google.

Yahoo announced earlier this week that it was laying off 1,000 employees as part of a cost-cutting measure.